Spam Law: Recent Legislation and its Impact on Canadian Fundraisers and Charities

Transcription

1 Spam Law: Recent Legislation and its Impact on Canadian Fundraisers and Charities October 28, 2013 Presentation to AFP Foundation for Philanthropy - Canada Mark Blumberg (mark@blumbergs.ca) Blumberg Segal LLP

2 Blumberg Segal LLP Blumberg Segal LLP is a law firm based in Toronto, Ontario Mark Blumberg is a partner at Blumbergs who focuses on non-profit and charity law Assists charities from across Canada with Canadian and international operations and foreign charities fundraising here and Free Canadian Charity Law Newsletter. Sign up at: (416) or mark@blumbergs.ca 2

3 Introduction Legal information not legal advice Views expressed are my own Questions will be dealt with at the end Timing 1 hour 3

4 Outline Some Preliminary Points on Anti-Spam Legislation Charity Sector Where do charities get revenue? Canada s Anti-Spam Legislation (CASL) Oversight Regulation of Electronic Communication Prohibited acts Spam Commercial Electronic Messages (CEMs) Penalties Implications for Fundraisers and Charities Transition Period Preparation Steps Opportunities to Improve Unsubscribe mechanisms: bad ideas used today Problems with ignoring spam concerns 4

5 Some Preliminary Points on Anti-Spam Legislation It is not simple and not finalized Not just legal and reputational - involves technology Need to try for express/positive consent Biggest misconception viewing it as applying only to bulk May apply to personal or non-work s from work account 5

6 Some Preliminary Points on Anti-Spam Legislation Will registered charities be excluded? Not yet provided for What is a commercial activity? broad and uncertain Don t focus on spam to exclusion of other legal/ethical issues 6

7 Obligation to comply with the law Registered Charities CRA s Fundraising Guidance CG T3010 Registered Charity Information Return Political activities record keeping and avoiding partisan activities Reputation, media coverage and impact on the sector 7

8 Where Do Canadian Charities Get Revenue? 212B Government 145b Earned income/related businesses 16 b (not including government) Fundraising 18 b Investments 3 b Blumbergs Snapshot of the Canadian Charity Sector

9 Canada s Anti-Spam Legislation (CASL) In December 2010, the Federal government passed Bill C-28 The Fighting Internet and Wireless Spam, Canada s anti-spam legislation An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radiotelevision and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (the Act ) No date has been provided as to when the Act and Regulations will come into force; however, it is expected to be sometime in 2014 For information on the Act, Regulations or updates on the implementation date, please refer to Industry Canada s website: 9

10 Timelines Bill C-28 Enacted: December 2010 Public Consultation Period on Draft Industry Canada Regulations Completed: September 2011 Final CRTC Regulations: March 2012 Revised Draft Industry Canada Regulations: January 2013 Public Consultation Period on Revised Draft Industry Canada Regulations Completed: February 2013 Final Industry Canada Regulations: TBA Proclamation: TBA 10

11 Oversight There are three government agencies responsible for ensuring compliance with CASL Canadian Radio-television and Telecommunications Commission (CRTC) Competition Bureau Office of the Privacy Commissioner Individuals and organizations are also permitted to bring a private action against individuals or organizations that are alleged to have violated CASL 11

12 Regulation of Electronic Communication Electronic communication is vital to our economy because it promotes efficiency Economical: reduces costs associated with sending and receiving physical copies of material Timely: sending and receipt of material is almost instantaneous Convenient: no restrictions as to when you can send or receive material and is always accessible Environmental: reduces harm to environment associated with printing, packaging and transportation 12

13 Prohibited Acts CASL prohibits the following : a) SPAM: sending a commercial electronic message, such as , text, instant message or other similar forms without consent b) HACKING: altering an electronic message s transmission data so causing the message to be delivered to another destination without consent c) MALWARE: installing computer programs, such as phishing, pharming or spyware programs without consent o o Phishing: attempting to obtain personal information such as usernames, passwords, and credit card details by pretending to be a trustworthy entity in an electronic communication Pharming: redirecting a website's traffic to another, phony site 13

14 Prohibited Acts CASL amends the Competition Act to prohibit: a) FRAUD: making false or misleading representations through electronic messages CASL amends the Personal Information Protection and Electronic Documents Act (PIPEDA) to prohibit: a) PRIVACY INVASION: collecting personal information through unauthorized access to a computer system b) ADDRESS HARVESTING: using computer programs to collect electronic addresses or using electronic addresses without consent 14

15 Regulation of Electronic Communication Problems such as spam, viruses, malware, phishing: a) impairs the availability, reliability, efficiency and optimal use of electronic means to carry out commercial activities; b) imposes additional costs on businesses and consumers; c) compromises privacy and the security of confidential information; and d) undermines the confidence of Canadians in the use of electronic means of communication to carry out their commercial activities in Canada and abroad. 15

16 Spam CASL prohibits individuals and organizations from sending a commercial electronic message ( CEM ) to an electronic address unless the recipient consented to its receipt and the CEM contains certain prescribed information 16

17 Spam CEM is an electronic message with a purpose to encourage participation in a commercial activity, including: a) offers to purchase, sell, barter or lease goods or services b) offers to provide a business, investment or gaming opportunity c) advertises or promotes the activities in (a) and (b) d) promotes a person as doing or intending to do any of the activities in (a) to (c) Commercial activity captures any transaction, act or conduct that is of a commercial character, whether or not the person who carries it out does so in the expectation of profit 17

18 Spam IC views Are there exceptions, such as the Do Not Call list for political parties and charities? Canada's anti-spam legislation (CASL) does not apply to non-commercial activity. Political parties and charities that engage Canadians through are not subject to CASL if these communications do not involve selling or promoting a product. There are also further exemptions for situations where such organizations engage in commercial activities with people who have made a donation or gift in the last 18 months, volunteered or performed volunteer work in the last 18 months, or were a member of the organization in the last 18 months. These exceptions apply to registered charities, political parties and candidates in federal, provincial, territorial or municipal elections. 18

19 Selling lottery tickets? Selling rain barrels? Are these commercial activities? Selling tickets to a gala dinner? Selling sponsorships to an event? Selling advertisement in a charity bulletin? A university encouraging a student to attend university? A university following up with an alumni about an affinity credit card? A university selling books and supplies to students? A charity encouraging people to go on a challenge event to climb Mt. Kilimanjaro? A hospital encouraging people to join prenatal workshop for a fee? 19

20 What is a commercial activity as it relates to registered charities? See CPS-019 CRA s Guidance What is a related business? (not referring to CASL but may have some relevance) business = commercial activity = deriving revenues from providing goods or services undertaken with the intention to earn profit. Facts very important The intended course of action The potential to show a profit The existence of profits in past years The expertise and experience of the person or organization that undertakes the activity Exceptions - Soliciting donations when donors do not expect any good or service in return for their contributions. 20

21 Is it a CEM? Yes then CASL applies, at this point, unless charities exempted in future Express consent, implied consent and exceptions No CASL does not apply but other legal, ethical, reputational issues apply 21

22 CEMs CEMs are permitted by CASL if both the following elements are present: Sender has the recipient's consent express or implicit CEM meets the prescribed requirements and contains the following information: sender s identity sender s contact information unsubscribe mechanism 22

23 CEMs: Express Consent Express consent exists when the recipient opts-in to receive CEMs Sender must disclose the following information to recipients giving express consent to receive CEMs: Purpose of consent Prescribed information identifying the party seeking consent Any other prescribed information statement informing the recipient that they may withdraw their consent 23

24 CEMs: Express Consent Prescribed information identifying the party seeking consent Name of person seeking consent or if it is sought on behalf of another person, the name of that other person Statement setting out who is requesting consent if message is sent on behalf of person Mailing address and either a telephone number providing access to an agent or voic or an or web address of the sender or person on whose behalf the message is sent 24

25 CEMs: Express Consent Request may be made in writing or orally but cannot be bundled with any other consents In writing: includes paper and electronic e.g. actively checking a box or clicking an icon on a webpage to indicate consent is permitted provided the date, time, purpose and manner of consent is stored in a database e.g. completing a consent form at point of purchase Orally: the sender must document the oral consent through use of 3 rd party verification or an audio recording May not use an electronic message to request consent Sender must send the recipient confirmation of an express consent request 25

26 CEMs: Express Consent CRTC released guidelines on the use of toggling to obtain express consent Toggling is acceptable when the recipient opts-in (eg. actively checks a box) The CRTC guideline can be accessed at: 26

27 CEMs: Implicit Consent Implicit consent can be established by An existing business relationship An existing non-business relationship Where the recipient published their electronic address or disclosed it to the sender with the following conditions: the message is relevant to their business or official capacity there is no statement by the recipient that they do no wish to receive unsolicited messages 27

28 CEMs: Implicit Consent An existing business relationship refers to a relationship arising from: a) the purchase or lease of goods or services for a two-year period following the purchase or lease b) the acceptance of a business, investment or gaming opportunity for a two-year period following the acceptance c) the bartering of anything in (a) d) a written contract e) an inquiry or application regarding anything in (a) to (c) for a six-month period following the inquiry or application 28

29 CEMs: Implicit Consent An existing non-business relationship refers to a relationship arising from: a) a donation or gift to a registered charity, a political party or organization or a person who is a candidate for publicly elected office for a two-year period following the donation or gift b) volunteer work performed for a registered charity, a political party or organization or a person who is a candidate for publicly elected office for a two-year period following termination c) membership in a club, association or voluntary organization, as defined in the Regulations, for a two-year period following termination membership means being accepted as a member according to membership requirements club, association or voluntary organization has the same definition as that in the Income Tax Act (Canada) * Revised Draft Industry Canada Regulations 29

30 CEMs: Exceptions to Consent A sender does not require consent when a CEM relates to: Providing quotes or estimates for the supply of goods or services if requested Finalizing a commercial transaction previously agreed to Providing warranty or safety information about goods or services that were used or purchased Providing information on an ongoing subscription, membership, account, loan or other similar arrangements or use or purchase of goods or services under these arrangements Providing information on the recipient s employment relationship or related benefit plan Delivering goods or services under the terms of a transaction Other communications as permitted by the Regulations 30

31 CEMs: Exceptions to Consent Other communications as permitted by the Regulations * First CEM sent by a sender who was referred to the recipient through: an existing business relationship an existing non-business relationship a family relationship a personal relationship * CEM must disclose the full name of the individual who made the referral and state that it is a referral * Revised Draft Industry Canada Regulations 31

32 CEMs: Prescribed Information CEMs must contain the following: prescribed information on the sender s identity sender s contact information an unsubscribe mechanism CRTC Electronic Protection ( EP ) Regulations prescribe the content and form of CEMs and requests for consent regarding the sending of CEMs CRTC released guidelines on the interpretation of the EP Regulations The CRTC guideline can be accessed at: 32

33 CEMs: Prescribed Information CEMs must contain the following information: Must provide the name of the sender or if the message is sent on behalf of another person, the name of that other person statement setting out who is requesting consent if message is sent on behalf of another person Must provide a mailing address and either: a telephone number providing access to an agent or voic or an or web address of the sender or person on whose behalf the message is sent o Mailing address must be valid for a minimum of 60 days after the message is sent If it is not practicable to include the above information or the unsubscribe mechanism in a CEM, the information may be posted on a link on an easily accessible website 33

34 CEMs: Prescribed Information Prescribed information and the unsubscribe mechanism in a CEM must be clearly and prominently displayed Unsubscribe mechanism must be able to be readily performed readily performed means that the unsubscribe mechanism should be easy for the consumer to access o e.g. link in an electronic message that directs the consumer to a website where they can unsubscribe from some or all of the CEMs 34

35 CEMs: Prescribed Information The unsubscribe mechanism must have the following features: a) Enable the recipient to indicate to the sender that they no longer wish to receive CEMs from the sender or the person sending the message on behalf of the sender, at no cost to the recipient, using the CEM that was sent or any other electronic means; and b) Provide an electronic address or link on a website where the recipient can send their unsubscribe notification o Sender must ensure electronic address or link is valid for a minimum of 60 days after the message is sent o Sender must comply with the recipient s unsubscribe notification within 10 business of the notification 35

36 CEMs: Exceptions CASL exempts the following types of communications: CEMs sent by senders with whom the recipient has a personal or family relationship with as defined in the Regulations * Family relationship includes blood, marriage, common-law and adoptive relationships * Personal relationship refers to direct, voluntary, two-way communications where it would be reasonable to conclude that the relationship is personal and there has been no indication by the recipient that they no longer wish to receive CEMs from the sender CEMs that are inquiries or applications of a commercial nature that relate solely to the commercial activity engaged in by the recipient * Revised Draft Industry Canada Regulations 36

37 CEMs: Exceptions CASL exempts the following types of communications: Other CEMs as prescribed by the Regulations CEMs that are sent between employees of the same organization or organizations with an existing business relationship that relate to the organization s business CEMs that respond to a request, inquiry or complaint CEMs relating to legal obligations or enforcement of legal rights CEMs accessed by recipients who are visiting Canada Two-way interactive voice communications Faxes sent to telephone accounts Voice recordings sent to telephone accounts * Revised Draft Industry Canada Regulations 37

38 Penalties CASL sets high maximum fines per violation: Up to $1 million for individuals Up to $10 million for organizations CASL also permits individuals or organizations a private right of action against individuals or organizations who are alleged to have violated CASL Officers and directors can be held liable for violations made by employees 38

39 Implications for Fundraisers and Charities CASL will apply to all Canadian fundraisers and charities However, CASL will not apply to all electronic messages sent by fundraisers and charities CASL will generally not apply to electronic messages requesting donations unless they encourage participation in a commercial activity CASL will likely apply to electronic messages about: o o o o purchase or sale of goods or services by the fundraiser or charity fundraising events charitable lotteries advertisements and promotions about the opportunities listed above 39

40 Implications for Fundraisers and Charities Fundraisers and charities will be required to obtain consent from recipients, either expressly or implicitly to send CEMs Fundraisers and charities will be permitted to send CEMs to recipients who made a donation or gift to the fundraiser or charity for up to two years after the donation or gift was made without obtaining express consent Express consent is required to send a CEM to recipients who made a donation or gift beyond the two year period and for other persons, including individuals who use or benefit from the goods or services provided by the fundraiser or charity Clubs, associations or voluntary organizations are permitted to send CEMs to their members for up to two-years after a member s membership has been terminated without obtaining express consent 40

41 Implications for Fundraisers and Charities If appropriate steps are not taken to comply with CASL, fundraisers and charities could see a reduction in their network of support Since fundraisers and charities often rely on electronic messages to engage their current and potential members, supporters and donors, CASL could affect the number of individuals contacted by the organization and also the level of participation by these individuals Compliance with CASL may require fundraisers and charities to incur costs related to: Creation and maintenance of databases to track express and/or implicit consent Information technology to manage CEMs and unsubscribe mechanisms Monitoring any 3 rd parties who send CEMs on their behalf 41

42 Transition Period Once the final Industry Canada Regulations are published, there will be a period of time between that date and the coming into force date of these provisions There is also expected to be a three-year transition period after the Act and Regulations have come into force During this period consent to send CEMs will be implied for pre-existing business and non-business relationships provided the recipient of the CEM has not notified the sender that they do not wish to receive any CEMs Once the Act and Regulations are in force, a sender may not send a request for express consent through an electronic message, unless there is implied consent A request for consent may only be made in writing or orally 42

43 Transition Period Even though the Act and Regulations have not been proclaimed, fundraisers and charities should start to prepare for CASL sooner rather than later At present, fundraisers and charities are permitted to send electronic messages seeking consent to recipients without the need for express or implied consent, which will not be permitted once the Act and Regulations come into force Fundraisers and charities can attempt to obtain consent from individuals in their current database prior to the Act and Regulations, which will assist with the continuity of their electronic communications when CASL is in force 43

44 Preparation Steps Review all types of electronic messages you have sent and probably will send to determine if they are CEMs Determine whether your charity will make a distinction between electronic messages and CEMs or will you treat every as a CEM. Identify all recipients of electronic messages Confirm whether express or implicit consent exists for recipients to which CEMs are sent Decide what type of consent your organization will require: Express consent Implicit consent Both 44

45 Preparation Steps Express consent requires that all consents be recorded and updated as needed Implicit consent requires that accurate records be kept which detail the date of the last donation or gift and/or the date membership was terminated to ensure that no CEMs are sent beyond two years of the relevant date Requires continuous monitoring and updating of recipient database If both methods are going to be used, records must clearly document the type of consent and contain the information required under each type 45

46 Preparation Steps Determine whether your fundraiser or charity will use 3 rd parties to send CEMs and review contracts to ensure you and the 3 rd party will comply with CASL Consider obtaining express consent from individuals on your current mailing list and other individuals that are not exempted from CASL Develop or modify a database to include CASL required information on consent Develop content and form of CEMs, including the unsubscribe mechanism 46

47 Segmentation of mailing lists Opportunities to Improve Frequency Content Providing more choice can provide a better donor experience Put yourself in the shoes of the CEM recipient who is not that committed to your mission and does not understand technology Do you want people on your lists if so make subscribe links prominent (can also push for people to follow you on Twitter, FB etc. at the same time) 47

48 Opportunities to Improve What are others doing on your behalf vendors, volunteers etc. Technology infrastructure anti-virus, anti-malware, updates etc. Don t be a deer in the headlights do something even if only small step Consider outreach today by for consent 48

49 Opportunities to Improve Under Corporate Law such as CNCA do you give notices of director and member meetings? If so should have written consent from directors and members to send electronic notices and to which address. 49

50 Opportunities to Improve Build better lists with express consent Hard work Partly marketing put value proposition forward Does your database track consents? Have express consent in different places (in agreements eg. 3 rd party event forms) Make sure that opt-in consent is used and not passive consent May want to cull some addresses or at least not use them for CEMs Monitor what is going into database (especially bulk imports) Who is responsible? Cheaper and easier if you start sooner 50

51 Unsubscribe Mechanisms: Bad Ideas Used Today Place it in 6pt font at the bottom of your Place it in 12pt font but in white colour font on a white background Require person to insert their address or other information before being able to process request Make it hard to understand when you get to the website how to unsubscribe from CEMs Having the unsubscribe mechanism being on a part of the website that the person cannot access You have to call during office hours to unsubscribe The mechanism does not work or does not work for a certain period 51

52 Problems with Ignoring Spam Concerns Penalties Alienate stakeholders May keep some $5 donors and lose some major gifts May get unwanted scrutiny from government funders Negative media attention 52

53 Thank you! Mark Blumberg Blumberg Segal LLP Barristers & Solicitors 390 Bay Street, Suite 1202 Toronto, Ontario, M5H 2Y2 Tel. (416) Toll Free (866) Fax. (416) Twitter at: and Newsletter: 53